Firms’ Competitive Strategy of Environmental Goods in a Competitive OligopolyFirms’ Competitive Strategy of Environmental Goods in a Competitive OligopolyAA12529030Firms’ Competitive Strategy of Environmental Goods in a Competitive Oligopoly

This paper uses the Cournot Model and the Stackelberg Model to analyse a competitive oligopolistic market that has responded to the recent social needs of environmental consideration and has applied environmental tax. It analyses the relationship between the supply; price; and profit and the rate of price changes due to environmental tax; demand for environmental goods; marginal cost; and the supply of environmental goods. The results fine that in both models, as the burden of environmental tax increases, the supply from both firms decline, prices of environmental goods increase and profit decreases. The larger the rate of the price changes due to the supply of environmental goods, the supply of environmental goods and profit of both companies decline. The difference in the two models is that the equilibrium of the Stackelberg Model, compared to the Cournot＝Nash equilibrium showed that larger profit was gained through increase in the supply of environmental goods by the leading firm.